Correlation Between Affinity Bancshares and Business First
Can any of the company-specific risk be diversified away by investing in both Affinity Bancshares and Business First at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Affinity Bancshares and Business First into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Affinity Bancshares and Business First Bancshares, you can compare the effects of market volatilities on Affinity Bancshares and Business First and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Affinity Bancshares with a short position of Business First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Affinity Bancshares and Business First.
Diversification Opportunities for Affinity Bancshares and Business First
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Affinity and Business is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Affinity Bancshares and Business First Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Business First Bancshares and Affinity Bancshares is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Affinity Bancshares are associated (or correlated) with Business First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Business First Bancshares has no effect on the direction of Affinity Bancshares i.e., Affinity Bancshares and Business First go up and down completely randomly.
Pair Corralation between Affinity Bancshares and Business First
Given the investment horizon of 90 days Affinity Bancshares is expected to generate 7.44 times less return on investment than Business First. But when comparing it to its historical volatility, Affinity Bancshares is 3.92 times less risky than Business First. It trades about 0.01 of its potential returns per unit of risk. Business First Bancshares is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,650 in Business First Bancshares on September 19, 2024 and sell it today you would earn a total of 60.00 from holding Business First Bancshares or generate 2.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 98.44% |
Values | Daily Returns |
Affinity Bancshares vs. Business First Bancshares
Performance |
Timeline |
Affinity Bancshares |
Business First Bancshares |
Affinity Bancshares and Business First Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Affinity Bancshares and Business First
The main advantage of trading using opposite Affinity Bancshares and Business First positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Affinity Bancshares position performs unexpectedly, Business First can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Business First will offset losses from the drop in Business First's long position.Affinity Bancshares vs. Home Federal Bancorp | Affinity Bancshares vs. Magyar Bancorp | Affinity Bancshares vs. Community West Bancshares |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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